Lee v. Hasson

Majority - Eva M. Guzman, Justice

Yes, the trial court erred in disregarding the jury’s finding that a relationship of trust and confidence existed between Lanna Lee and Theodore Hasson. No, there was legally insufficient evidence that Hasson complied with his fiduciary duty to Lee, and therefore, Hasson failed to overcome the presumption that their oral agreement is void. The court determined there was legally and factually sufficient evidence for the jury to find a pre-existing informal fiduciary relationship between Lee and Hasson, characterized by a long-standing business and close personal friendship, where Lee relied on Hasson for moral, financial, and personal guidance. This reliance was evident from Hasson selling the Pais multiple large life insurance policies, Lee confiding in Hasson about her marital problems, and seeking his financial and divorce negotiation advice before any formal employment agreement. Citing Kinzbach Tool Co. v. Corbett-Wallace Corp. and Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., the court affirmed that such a relationship imposes an elevated fiduciary duty on Hasson, requiring him to measure his conduct by high equitable standards and placing the burden on him to prove compliance. The court then applied the five-factor test for fiduciary compliance from the Texas Pattern Jury Charges, finding legally insufficient evidence that Hasson satisfied any of them: 1. Fairness of Transactions: Hasson failed to demonstrate that his compensation was fair and reasonable. His proposed compensation (e.g., $15.4 million or $4.7 million) was disproportionate to his qualifications and the services rendered, especially when compared to the fees of a board-certified family law attorney. The agreement would effectively reduce Lee’s share of the marital estate to less than 50%, benefiting Hasson at Lee's expense. 2. Reasonable Use of Confidence: Hasson recommended individuals with whom he had relationships (e.g., real estate agent Jim Barron, accountant Raleigh Bailes) for Lee's benefit without fully assessing their qualifications or disclosing his financial agreement with Lee to Lee's other professional advisors. He advised Lee on forming a corporation (B. Lanna, Inc.) for asset protection without evidence of his qualification to give such legal advice or the efficacy of the solution. 3. Utmost Good Faith and Scrupulous Honesty: Hasson allowed Lee's company, B. Lanna, Inc., to be billed for work performed solely for his personal benefit. He also executed contracts ostensibly on Lee’s behalf (e.g., for a pool at the Dunsinane House) after the house was no longer part of his compensation, falsely claiming to act under a power of attorney. 4. Placing Lee’s Interests Before His Own/Avoiding Conflicts: Hasson arranged a loan for Lee that included a $120,000 payment to his own company without evidence of services rendered for that payment. He structured compensation schemes, including a 10% partnership interest and additional salary, partly to ensure his advice wasn't 'biased,' which inherently conflicted with his pre-existing fiduciary obligation to be unbiased. He pursued real estate transactions that he believed would be unprofitable for Lee but benefited himself. 5. Full and Fair Disclosure: Hasson failed to disclose his lack of qualifications to provide legal or appraisal advice related to the divorce settlement. He also provided incorrect tax advice, stating his fees were tax-deductible when they were not, and did not disclose this error to Lee. He did not fully explain the potential risks of funneling personal payments through B. Lanna, Inc. for asset protection purposes. Because Hasson failed to present legally sufficient evidence of compliance with his fiduciary duty, he could not overcome the presumption that his agreement with Lee was void. Consequently, the trial court's error in disregarding the jury’s finding of a confidential relationship was harmful and constituted reversible error.